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Investors get comfortable with Brent crude at USD 80 a barrel this week - Report

Gasoil News - Published on Fri, 21 Sep 2018

Investors get comfortable with Brent crude at USD 80 a barrel this week - Report

Investors get comfortable with Brent crude at USD 80 a barrel this week - Report

Reuters reported that traders and investors have loaded up on bullish Brent oil bets this week, after signals that Saudi Arabia is in no rush to increase production, even with the price near USD 80 and as buyers grow uneasy over the impact of US sanctions on Iranian supply. Data from the InterContinental Exchange shows that open interest in buy, or call, options at USD 80 and USD 85 a barrel that expire on September 25 has jumped nearly 45 percent in two days. At a combined 54,000 lots, equivalent to about 54 million barrels of oil, open interest for these two calls alone is now equal to nearly half of that for all November calls and puts with strikes between USD 60 and USD 100 barrel.

The November Brent crude futures contract rose as much as 1 percent to nearly USD 80 a barrel after a media report cited unnamed sources as saying Saudi Arabia was “comfortable” with the price at that level. On Wednesday, the price was down 3 cents at USD 79.00 by 1110 GMT.

Consultancy JBC Energy said in a note “The market may have taken this as a sign that supplies may not go up much in response to further declines in Iranian crude exports.”

The report said that Saudi Arabia wants oil to stay between USD 70 and USD 80 a barrel for now, as the world’s biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until U.S. congressional elections.

The prospect of US sanctions hitting Iran’s roughly 2 million barrels per day in crude exports from November, when the rest of OPEC has limited spare capacity, has helped oil stay well above $70 a barrel since May, when Washington announced it would ditch an international nuclear agreement with Tehran.